Archive for February, 2013

Idea for a disruptive biz-model innovation for banks

February 26, 2013 4 comments

There is a lot of discussions and activities around the revival of the good old ATM.

  • Some are trying to make these machines more Customer-centric like Wells Fargo.
  • Some are trying to improve the overall user experience of the ATM like Diebold.

However, the true question should be the following:

Do we even need an ATM? Is there a better, easier, faster way to manage cash than via an ATM?

The first bank to figure out the answer to this question has the potential to truly disrupt the banking industry from a cash management perspective.

One way that I think could be used is the small businesses that accept payments from a credit or debit card?

Can they not be used to function as a teller for the bank? The bank instead of charging a fee for the use of the card machine, can instead pay the business a nominal amount and convert them into cash dispenser.

All the technology that is needed to make this happen is already available. The only change is in the execution of the idea.

This is just one idea to enable this. There could be many more viable ideas.. The question is are we looking for them?

Do let me know your thoughts by posting your comments below or tweeting them to me at @rmukeshgupta.



Solving the healthcare crisis

February 22, 2013 3 comments

A couple of weeks back, I was attending my cousin’s marriage ceremony in Chennai and my father got fever. He was also complaining of cough and difficulty in breathing. We took him to a clinic where a doctor gave some medication.

We came back to our hometown (Bangalore) the next day and took him to a hospital to do continue the treatment as the breathlessness did  not go away. The doctor who attended my father immediately asked him to get admitted in the hospital to enable better care. He was kept in the Intensive care unit for some time under observation and then moved to a private room, once the doctors felt that he had stabilized. Then started the series of tests and more tests. He was being given oxygen using a mask and some antibiotic medicine via IV apart from his regular medicines that he has been taking for a while now.

A day passed in the room and my father felt better. However, he still experienced some pain in the ribs when he coughed. This resulted in the doctor asking us to stay in the hospital for another day to do more tests and to keep him under observation.

I am no doctor and maybe do not understand if this hospitalization (of 3 days) was really necessary. But then, we did not complain, as there was no financial burden on us, as the cost of hospitalization would be covered by our health insurance policy.

In my opinion, a big reason for the  escalating healthcare costs in India is the fact that “Health Insurance companies are willing to reimburse the cost of treatment only if the patient gets admitted in the hospital. ”

No hospitalization = no reimbursement.

This creates a strong incentive for both the hospital (for obvious reasons) and the patient (to get the expense reimbursed) to go in for hospitalization even if it was not absolutely necessary.

Add to that, the hospitals can now do more tests, build bigger hospitals with more rooms and even more expensive equipment’s to do more tests. Though, this might help in building up infrastructure for better healthcare, all of these end up in escalating costs for insurance companies, which is then passed on to the consumers as an increase cost of insurance.

Now, imagine my plight if I did not have an insurance policy to cover my health. The treatment in good hospitals with good infrastructure would be prohibitively expensive, which in turn makes buying health insurance attractive.

So, everyone in the ecosystem of health care has a financial incentive to continue to drive the healthcare costs up, which ends up becoming a beast out of control.

So, how can we address this problem?

There are 2 kinds of solutions here..

  • Short term, quick wins: 
    • If insurance companies do not insist on hospitalization to cover the cost of healthcare, patients would not be so willing to get hospitalized. They would prefer hospitalization only if absolutely necessary.
    • If Insurance companies can find a way to incentivise hospitals for non-hospitalization, this coupled with the above will result in a quick win in reducing the overall cost for the insurance provider, which they can either pass on to their customers as lower cost of insurance or keep the savings as increased profitability.
  • Long term solutions:
    • Insurance companies to start and run a channel of clinics where insured can get good medical advice for free or very low cost. They will reimburse medical claims only if the hospitalization was recommended by one of the doctors from their clinics.
    • IF possible, they should also operate a chain of hospitals which can then be used to provide high quality treatment, and since the cost of treatment is a direct cost for them, they have strong financial incentives to reduce the cost per patient so that they can improve their profitability.
    • If we get most of the insurance companies to do this, then competitive pressures will ensure that this cycle is positively reinforced and the costs never escalate again.

These are exactly the measures that are not being taken but can go a long way in bringing healthcare costs down significantly& continue to do so in the long haul.

What do you think about this? Let me know by commenting below or by tweeting your thoughts to me at @rmukeshgupta.

The changing role of a sales executive

February 19, 2013 2 comments

In today’s environment, sales executives serve one purpose – to sell your products and services to your prospects and customers.

In a B2B environment, we are slowly realizing that the nature of how we sell has and is changing rapidly. We started with selling products and services based on features and benefits. Then we moved towards solutions selling. Slowly, but steadily, we are now moving towards consultative selling or even challenger selling models.

All of these models are still geared towards the “Push” model of selling. We have built a product or service, it will will help you solve a problem that you may or may not know about. By making you aware of the problem & framing it in a way that only my product or service can solve it, I entice you to buy the product or service that I sell.

Push products or services

Sales executives are measured on how well and how much do they sell these products and solutions. They get big commissions based on their ability to sell.

There are two trends that we need to see and take into account:

  1. We are moving from an era of mass production to an era of mass customization (in every sphere of life). You can even order a car to be customized to your requirements. 
  2. We are also moving away from mass markets to niche market segments.

Organizational skills required to succeed in a mass-production, mass-market scenario is very different from the skills required to succeed in a mass-customized, niche market reality.

In an era of mass production, it was more important to produce in large quantities (efficiency of scale) and find ways to sell the inventory at a high enough price to turn in profits. So, to succeed in this world, you focus on producing in large quantities to reduce your cost/unit, hire an army of sales people, train them on different selling techniques, teach them about your product, give them a quota (with the possibility of earning a lot of commissions) and let them loose in the market.

In order to motivate them to sell more, you link their payout to their sales. You then find ways to improve your production, reduce cost and increase sales. You filter & invest in ideas that have the biggest addressable market with minimal or no competition. You keep repeating the process in order to be successful.

This process wont work in a world of mass-customization. In this era, you need your sales executives to listen & understand the unique nature of your prospects and customers  business. Then figure our their unique requirements or challenges. Then be able to create a concept of a product that could solve this challenge. They need to be able to customize your product (if not help create from scratch) to suit the needs of the customer/prospect. You do not need an army of sales executives who are solely tasked to sell your products or services. You need sales people to be folks who understand the  businesses of their prospects or customers, understand your strengths and abilities and are able to create a custom solution that solves a challenge for your prospects/customers.

In this world, the way you compensate your sales team also will change. You no longer are required to incentivize them for selling the standard product/service. You need to retrain them to be able to better listen better, identify trends, understand all aspects of a businesses. The primary incentives will be based on their ability to come up with creative ideas on how to address the challenge of your customer quickly, cheaply & completely. They will be expected to come up with ideas for products/services or niche market segments which can be addressed by creating new solutions.

They will be required to be morphed into the eyes and ears for the organizations, always scouting  for new niche market segments and unique customer/prospect challenges to address. They will also provide fodder to the innovation engine of the organization, helping build new products/services (as they are the closest to the world of prospects or customers).

Do you think you are ready for this new reality? How far do you think we are from this reality?

Do let me know your thoughts by commenting below or tweeting it to me at @rmukeshgupta.

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